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Canadian Equity Strategies

Canadian equity strategies are designed for investors seeking long-term growth within a familiar market environment. By investing in high-quality Canadian businesses, they provide exposure to companies operating within a stable regulatory framework while participating in the growth of the domestic economy.

Pembroke’s Canadian Equity Strategies focus on identifying companies with durable competitive advantages, strong financial characteristics, and management teams aligned with shareholders. Using a disciplined, bottom-up research process, portfolios are constructed based on long-term fundamentals, with an emphasis on owning businesses capable of compounding value over time.

These strategies often serve as a core equity allocation within a diversified portfolio, providing a foundation for long-term growth while maintaining a clear connection to the Canadian market.

Within our Canadian equity approach, you can choose from four strategies that vary by market capitalization, income characteristics, and growth profile.

Strategies

The Pembroke Canadian Growth Strategy is an actively managed, high-conviction Canadian equity strategy focused on long-term capital appreciation.

The Pembroke Canadian Growth Strategy invests primarily in Canadian small- and mid-capitalization companies that Pembroke believes possess strong growth potential, durable competitive advantages, and management teams aligned with shareholders’ interests. The objective is to identify and own high-quality growth businesses at an early or intermediate stage of development and to participate in the long-term compounding of their intrinsic value.

The strategy is rooted in Pembroke’s long-standing expertise in Canadian growth investing and reflects Pembroke’s belief that long-term growth opportunities are often most compelling among smaller and mid-sized companies earlier in their growth lifecycle. These companies frequently operate in niche markets, benefit from structural growth tailwinds, or are in the early stages of scaling proven business models. While they may be underrepresented in broad Canadian equity indices, they can generate meaningful value for long-term investors through sustained earnings and cash flow growth.

The Pembroke Canadian Growth Strategy is managed using a bottom-up, benchmark-agnostic approach. Portfolio construction is driven by fundamental company analysis rather than index membership or sector weightings. As a result, the strategy may differ meaningfully from broad Canadian equity benchmarks in terms of holdings, sector exposure, and market-cap composition. This differentiation is intentional and reflects Pembroke’s conviction that disciplined stock selection, rather than index alignment, is a key driver of long-term returns in small- and mid-cap equities.

A central focus of the strategy is per-share value creation, with an emphasis on growth in earnings, cash flow, and intrinsic value rather than top-line growth alone.

While the strategy is predominantly invested in Canadian equities, it retains the flexibility to invest a limited portion of assets outside Canada when compelling growth opportunities arise or when diversification benefits are attractive. Any such investments are evaluated using the same bottom-up fundamental criteria applied to Canadian holdings.

A defining characteristic of the Pembroke Canadian Growth Strategy is its emphasis on quality. Pembroke seeks companies with scalable business models, strong balance sheets, and the ability to reinvest capital at attractive rates of return. Management quality and alignment are central considerations, with a preference for companies led by owner-operators or executives with meaningful equity ownership. The strategy is oriented toward capital appreciation rather than income, and most portfolio companies reinvest earnings to support growth rather than paying significant dividends.

Overall, the Pembroke Canadian Growth Strategy offers investors access to a relatively focused portfolio of high-quality Canadian growth companies, managed with a disciplined, research-intensive approach and a long-term investment horizon.

The Pembroke Canadian Growth Strategy is suited to investors seeking long-term capital growth who are comfortable with equity market volatility and periods of benchmark-relative performance variation. Pembroke classifies the strategy’s risk level as medium to high, reflecting its focus on small- and mid-capitalization growth companies and its benchmark-agnostic construction.

The strategy may be appropriate for investors who:

  • Have a long-term investment horizon, typically five years or longer
  • Are willing to tolerate periods of higher volatility and performance dispersion relative to broad Canadian equity benchmarks
  • Seek capital appreciation rather than current income
  • Wish to complement core large-cap or index-based Canadian equity exposure with an actively managed growth strategy

Within a diversified portfolio, the strategy may serve as a satellite allocation designed to enhance overall growth potential. Investors should be comfortable with the liquidity and volatility characteristics associated with smaller companies and able to remain invested through full market cycles.

It can be particularly relevant for investors who already have exposure to large-cap Canadian equities and wish to broaden their opportunity set by accessing smaller, less widely followed companies.

The strategy is not suitable for investors seeking stable income, low volatility, or short-term capital preservation.

The Pembroke Canadian Growth Strategy is managed using a disciplined, bottom-up investment process centered on fundamental research and long-term ownership. The investment team evaluates companies on an individual basis, focusing on business quality, growth potential, financial strength, and management capability.

The research process begins with idea generation across a broad universe of Canadian small- and mid-cap companies. Pembroke’s analysts and portfolio managers conduct detailed analysis of financial statements, competitive positioning, industry structure, and long-term growth drivers. Particular emphasis is placed on understanding how a company generates value on a per-share basis and whether it can sustain growth through reinvestment of internally generated capital.

Pembroke seeks businesses operating in expanding markets or with the ability to gain market share through innovation, execution, or differentiation. Growth is assessed not only in terms of revenue expansion, but also through improvements in profitability, cash flow generation, and returns on invested capital. Companies that rely heavily on financial leverage or external capital to support growth are generally avoided, as Pembroke favors growth that is durable and internally funded.

Valuation discipline is an important component of the investment process. While the strategy is growth-oriented, Pembroke evaluates valuation in the context of long-term intrinsic value rather than short-term market sentiment. Investments are made when the team believes that a company’s long-term growth and intrinsic value are not fully reflected in its market price, creating an attractive opportunity.

Engagement with company management is a key element of Pembroke’s research process. The investment team regularly meets with executives to assess strategic vision, capital allocation discipline, and alignment with shareholders. Ongoing dialogue with management helps ensure that the investment thesis remains intact and that changes in strategy, execution, or governance are identified in a timely manner.

The portfolio is constructed on a relatively focused, high-conviction basis, with diversification across industries and economic drivers. Position sizing reflects conviction, liquidity, and company-specific risk considerations rather than predefined targets or index constraints. The strategy does not seek to mirror index sector weights, and portfolio composition is an outcome of bottom-up opportunity selection.

Risk management is embedded throughout the investment process. By focusing on business quality, balance sheet strength, and management alignment, Pembroke seeks to mitigate the risks inherent in small- and mid-cap investing. Diversification across holdings and industries helps manage company-specific risk, while continuous monitoring ensures that changes in fundamentals or valuation are reflected in portfolio decisions.

Environmental, social, and governance considerations are incorporated into the investment process as part of the overall risk assessment, consistent with Pembroke’s responsible investment practices. These factors are evaluated alongside financial and strategic considerations to support long-term value creation and risk management.

Performance of the strategy is expected to vary across market cycles, with periods of both outperformance and underperformance relative to broad Canadian equity indices. The strategy is designed for investors who can maintain a long-term perspective and remain committed through market volatility in pursuit of long-term capital growth.

Investors may access this strategy by investing in the Pembroke Canadian Growth Fund or the Pembroke Canadian Growth Pooled Fund. The strategy may also be implemented through a separately managed account for clients with a discretionary management agreement. Additional information about the Pembroke Canadian Growth Fund, including investment objectives, risks, fees, and expenses, is available in the fund’s prospectus. The pooled fund is offered to accredited investors. 

The Pembroke Dividend Growth Strategy is a Canadian equity portfolio that seeks to combine dividend income with long-term capital growth.

The Pembroke Dividend Growth Strategy invests primarily in Canadian companies, often emphasizing companies in the small to mid-cap range, that pay dividends or are expected to initiate dividends in the near future, while also demonstrating strong growth characteristics.

Pembroke focuses on high-quality, shareholder-friendly companies with the ability to grow earnings and return capital to shareholders through dividends. This approach marries two complementary objectives: current income and capital appreciation. The core portfolio typically consists of a diversified selection of Canadian equities, with exposure across multiple sectors.

While primarily focused on Canadian equities, the strategy has the flexibility to invest in U.S. companies. This allows Pembroke to capture attractive dividend-growth opportunities outside Canada when they arise, and to add geographic diversification. The strategy may also allocate a portion of the portfolio to preferred shares to enhance income and may hold other instruments for liquidity or defensive purposes, as appropriate.

Pembroke’s Dividend Growth Strategy is benchmarked to the S&P/TSX Composite Index, reflecting its broad Canadian equity mandate. Like Pembroke’s other equity strategies, it is managed with a bottom-up, benchmark-agnostic approach, meaning sector weights may differ substantially from the index.

The strategy distributes net investment income on a quarterly basis, with any realized capital gains typically distributed annually. Distributions are automatically reinvested unless investors elect to receive them in cash.

The strategy’s defining feature is the blend of growth and income: the portfolio companies typically exhibit solid earnings growth and high returns on equity yet also distribute a portion of profits as dividends. Portfolio holdings are selected with an emphasis on balance: a reasonable dividend payout ratio, sufficient free cash flow to both fund dividends and reinvest in the business, and a clear runway for organic growth.

The Pembroke Dividend Growth Strategy is designed for investors who seek equity-like growth but also value a measure of current income from their investments. It may be particularly suitable for individuals with a moderate risk tolerance, as the inclusion of dividend-paying stocks can often temper volatility relative to non-dividend growth stocks. Pembroke classifies the Dividend Growth Strategy as a medium-risk equity strategy. Investors who should consider this strategy include those looking to build wealth over the long term through equities while enjoying periodic dividend cash flows. The strategy can function as a core Canadian equity holding for an investor with moderate risk profile, given its broad diversification and dual focus on growth and dividends.

Because the strategy has tended to emphasize small- and mid-capitalization companies, investors should be comfortable with the higher volatility that can be associated with this segment of the equity market relative to larger, more established dividend-paying companies. As an equity strategy, performance will fluctuate over time, and investors should have a long-term investment horizon and the ability to tolerate periods of market drawdowns.

At the same time, the portfolio’s focus on dividend-paying companies may help moderate volatility relative to non-dividend growth strategies. Pembroke targets businesses with sustainable dividend policies, strong cash flow generation, and the capacity to grow both earnings and dividends over time.

As a result, the strategy may appeal to investors seeking equity growth with an income component, including those looking to diversify beyond bonds or GICs into equities that provide growing dividends, which may help support income growth during inflationary environments. Within a multi-asset portfolio, the Dividend Growth Strategy can complement pure growth strategies by adding yield, or complement fixed-income holdings by adding equity upside.

This strategy may not be suitable for investors who are unwilling to accept equity market volatility or who are seeking very high current yield without an emphasis on growth.

Overall, it’s ideal for long-term investors who want a balanced approach to equity investing, blending the compounding of capital gains with the steadiness of dividend income.

Pembroke employs a disciplined bottom-up strategy to construct the Dividend Growth portfolio. The investment process begins with screening for companies that meet both growth criteria and dividend criteria. Growth and yield are never thought of as mutually exclusive factors when considering potential investments.

The objective is to generate attractive long-term total returns through a combination of dividend income and capital appreciation. In cases where the dividend yield is higher, earnings growth can afford to be moderated.

Investment criteria include high returns on equity, and strong competitive positioning, characteristics Pembroke emphasizes across all its strategies. Dividend criteria involve either an existing dividend payout or a clear path toward initiating one.

Importantly, Pembroke is not interested in high-yield stocks with deteriorating fundamentals; rather, the focus is on growing companies that also share profits with investors. This often leads them to companies with moderate yields but high potential for dividend growth over time, rather than very high current yields that may be unsustainable.

Once potential candidates are identified, Pembroke conducts in-depth fundamental analysis. This includes evaluating the company’s business model, competitive advantages, financial health (with attention to metrics like payout ratio, free cash flow and appropriate leverage for the company’s business model, to ensure the dividend is well-supported), and growth strategy. Meetings with management are an integral part of the research process. Pembroke’s team frequently engages company leadership to assess their capital allocation philosophy and commitment to shareholder returns. The ideal investment is a company with a prudent growth plan and shareholder-friendly management that balances reinvesting in the business with returning cash via dividends or buybacks.

Portfolio construction is conducted in a benchmark-agnostic manner, while maintaining disciplined risk controls. The managers diversify across sectors to avoid over-concentration, emphasize liquidity, and seek to avoid overly leveraged companies or those with unstable dividend profiles.

During periods of market stress, or when equity valuations are less compelling, the portfolio may temporarily hold high-quality short-term bonds or cash equivalents to help manage risk and reduce volatility.

In summary, the Pembroke Dividend Growth Strategy follows a nuanced approach: it refuses to sacrifice growth for yield, insisting instead that portfolio holdings deliver on both fronts. Each investment is expected to contribute to the total return via stock price appreciation and via dividends. The strategy’s performance will come from a combination of dividend income and capital gains from rising stock prices. Over a full market cycle, the goal is to achieve attractive equity returns with the expectation of somewhat lower volatility than a pure growth strategy. This strategy exemplifies Pembroke’s belief that investing in “growth companies that pay you to hold them” can lead to excellent long-term outcomes.

Investors may access this strategy by investing in the Pembroke Dividend Growth Fund. The strategy may also be implemented through a separately managed account for clients with a discretionary management agreement. Additional information about the fund, including investment objectives, risks, fees, and expenses, is available in the fund’s prospectus.

The Pembroke Canadian All Cap Strategy is an actively managed Canadian equity portfolio focused on long-term capital appreciation.

The Pembroke Canadian All Cap Strategy invests in mid- to large-cap Canadian companies identified as having above-average, sustainable growth potential and trading at attractive valuations relative to their long-term prospects. Stock selection emphasizes high-quality growth businesses with strong earnings growth, durable competitive advantages, and management teams that are aligned with shareholders’ interests. The result is a deliberately focused, high-conviction portfolio in which individual security selection is the primary driver of returns.

The portfolio is constructed using a bottom-up, sector-agnostic approach. Diversification is achieved through disciplined position sizing, with position sizes managed to limit exposure to any single holding. Sector exposures emerge as a result of bottom-up stock selection rather than predefined targets.

The benchmark for this strategy is the S&P/TSX Composite Index, reflecting its broad Canadian market focus. However, the strategy is meaningfully differentiated from the index, reflecting Pembroke’s more than five decades of experience investing in high-quality growth businesses and its willingness to diverge from index weights when fundamentals warrant.

Overall, the Canadian All Cap Strategy offers investors exposure to high-quality Canadian growth companies across the mid- and large-cap spectrum, managed in an active, conviction-driven manner.

This strategy is suitable for investors seeking a core Canadian equity holding with a growth orientation. Pembroke classifies the Canadian All Cap Strategy as a medium-risk equity strategy. The strategy is suited to investors who can tolerate normal equity market volatility and periods of performance divergence relative to broad Canadian equity indices. Investors in the Canadian All Cap Strategy should be comfortable with moderate short-term fluctuations in pursuit of long-term capital appreciation.

The strategy may appeal to individuals looking to complement or replace passive Canadian index exposure with a high-conviction, actively managed portfolio. It can serve as a core Canadian stock portfolio for growth-focused investors, or as a satellite holding to augment more index-linked Canadian equity investments by adding exposure to Pembroke’s unique selection of growth companies.

The strategy’s inclusion of both established large-cap leaders and select mid-cap growth companies means its performance will, at times, diverge from the S&P/TSX Composite. This is by design. The strategy is therefore best suited to investors who desire active management and are willing to accept differences in sector and market-cap exposure relative to the broad market in exchange for greater differentiation from index returns.

The Canadian All Cap Strategy is appropriate for investors who want diversified exposure to Canada’s equity market, but with a decided focus on quality and growth characteristics rather than simply mirroring the index. 

This strategy may not be suitable for investors seeking stable income, low volatility, or capital preservation, or for those with short-term investment horizons. Investors who prefer index-tracking strategies or who are unwilling to tolerate periods of benchmark-relative underperformance may find the strategy misaligned with their objectives.

Pembroke’s investment philosophy in the Canadian All Cap Strategy centers on bottom-up, fundamental stock picking. The portfolio managers employ rigorous research to identify companies demonstrating strong earnings growth, attractive returns on capital, and quality management.

A key element of the approach is alignment: Pembroke favors businesses where management and insiders have significant ownership stakes, aligning their interests with shareholders.

The team uses a benchmark-agnostic process: they do not attempt to mirror the index sector weights, but instead build the portfolio one company at a time based on merit and long-term return potential. This approach results in a differentiated portfolio, with meaningful exposure to high-quality Canadian companies that are underrepresented or absent from the S&P/TSX Composite.

Risk management is achieved through prudent position sizing and diversification. By limiting exposure to any single stock and managing sector concentration, the managers prevent excessive exposure to any one company or industry. The strategy’s portfolio characteristics typically include faster earnings growth and higher valuations than the market, commensurate with owning superior growth businesses.

In practice, the investment process begins with idea generation across all sectors within the Canadian mid- and large-cap universe. Pembroke’s team leverages both quantitative screens and extensive industry knowledge to shortlist companies exhibiting the growth, quality, and alignment criteria. Fundamental analysis is then conducted: this involves evaluating the company’s business model, market opportunity, financial strength, and management caliber. The team also frequently engages with company management as part of due diligence. Analysis focuses on identifying businesses with sustainable competitive advantages and the ability to compound value over extended periods.

Valuation discipline is a crucial overlay – even high-growth companies must trade at reasonable prices relative to their prospects. Pembroke will only add a stock to the Canadian All Cap Strategy if it offers an attractive risk/reward profile over a long-term horizon.

Once invested, the team maintains a long-term perspective, targeting a holding period of several years for successful investments. Portfolio turnover is generally moderate, reflecting a long-term investment horizon and patience for investment theses to develop. The strategy emphasizes long-term ownership, with portfolio decisions driven by changes in underlying business fundamentals rather than short-term market movements.

Overall, the Pembroke Canadian All Cap Strategy aims to deliver superior capital growth by owning a relatively focused collection of Canada’s top growth companies. The strategy blends the stability of established large-cap leaders with the growth potential of carefully selected mid-cap companies, all within a disciplined, research-intensive investment process refined over decades.

Investors may access this strategy by investing in the Pembroke Canadian All Cap Fund. The strategy may also be implemented through a separately managed account for clients with a discretionary management agreement. Additional information about the fund, including investment objectives, risks, fees, and expenses, is available in the fund’s prospectus.

The Pembroke Genesis Strategy is an actively managed, high-conviction equity strategy focused on long-term capital appreciation through investment in predominantly Canadian micro-cap and small-cap growth companies.

The Pembroke Genesis Strategy seeks to invest at an early stage in publicly listed businesses that exhibit strong long-term growth potential but are often underfollowed, under-researched, or inefficiently priced by the market.

The strategy is designed to address a structural gap in the Canadian small-cap market, where declining research coverage, reduced institutional participation, and limited long-term capital have created opportunities for patient, fundamental investors. Pembroke seeks to partner with emerging public companies at an early stage of their growth journey, providing both capital and the perspective of an experienced long-term shareholder.

Genesis is implemented as a concentrated, bottom-up portfolio, reflecting a high-conviction approach to stock selection. The strategy generally invests in companies with smaller market capitalizations, typically in the micro-cap and small-cap range at the time of investment, with no requirement to exit positions solely because a company’s market capitalization grows beyond this range. Portfolio composition is driven entirely by bottom-up security selection rather than index membership, sector weights, or capitalization targets.

While the strategy is primarily oriented toward Canadian-listed companies, it retains the flexibility to invest a portion of the portfolio in U.S. or global securities where certain sectors or growth opportunities are underrepresented in Canada. In addition, the strategy may, in limited circumstances, invest in private or pre-IPO opportunities where early access is expected to enhance long-term return potential.

Genesis is designed to capture the early-stage public company phase, where both fundamental business growth and increased market recognition can contribute meaningfully to long-term returns. The strategy seeks to invest in companies that are transitioning from relative obscurity toward broader investor awareness, where patient capital and fundamental analysis can be particularly impactful.

The Pembroke Genesis Strategy is suited to investors seeking long-term capital appreciation who are comfortable with the risks associated with investing in micro-cap and small-cap equities. The strategy is designed for investors with a long-term investment horizon, ideally ten years or longer, who can remain committed through periods of market volatility and limited liquidity.

The strategy may be appropriate for investors who:

  • Seek exposure to underfollowed Canadian micro-cap and small-cap growth companies
  • Are comfortable with meaningful short-term fluctuations and periods of relative underperformance associated with micro-cap and small-cap investing
  • Are focused on long-term capital appreciation rather than income
  • Understand the risks associated with limited liquidity and emerging public companies

Role Within a Portfolio

Within Pembroke’s equity lineup, the Genesis Strategy represents the earliest stage on the growth continuum and is therefore best suited as a satellite allocation rather than a core equity holding. It may serve as:

  • A differentiated allocation to early-stage Canadian public companies
  • A complement to larger-capitalization or more diversified equity strategies
  • A source of long-term growth potential driven by both earnings expansion and increased market visibility

For investors with existing exposure to Pembroke’s Canadian and U.S. growth strategies, Genesis can provide access to an earlier point on the growth continuum, where market inefficiencies may be more pronounced.

The Pembroke Genesis Strategy is not suitable for investors with short-term liquidity needs, those seeking capital preservation or stable income, or those unwilling to tolerate elevated volatility and liquidity risk. Investors who require predictable short-term outcomes or who are uncomfortable with meaningful deviations from broad equity benchmarks may find the strategy misaligned with their objectives.

The Genesis Strategy is managed using a disciplined, bottom-up, research-intensive investment process. The portfolio is constructed to balance diversification with high-conviction position sizing.

The strategy focuses on companies operating across a broad range of industries, such as healthcare, technology, business services, industrials, real estate technology, and environmental or sustainability-oriented sectors. These companies often address large or expanding end markets, benefit from high levels of revenue persistency, and have the potential to grow without repeated reliance on external capital markets.

Pembroke places particular emphasis on owner-managed or founder-led businesses, where management alignment, capital allocation discipline, and long-term decision-making are central to the investment thesis. The presence of a stable, informed, long-term shareholder is viewed as a potential positive influence as these companies navigate the transition from obscurity toward broader market recognition.

Bottom-Up Fundamental Research

Pembroke’s investment team conducts extensive proprietary research to identify companies with:

  • The potential for sustained long-term growth in earnings and cash flow
  • A reasonable path toward profitability or self-funded growth
  • Strong management teams with meaningful ownership alignment
  • Sound balance sheets and prudent financial structures
  • Large or expanding total addressable markets

Research includes detailed financial analysis, management engagement, industry assessment, and the application of Pembroke’s internal quality and governance frameworks. Given the size and stage of the target companies, research coverage is often limited externally, increasing the importance of in-house due diligence.

Valuation Discipline

While growth potential is central to the strategy, valuation remains a critical component of the investment decision. Pembroke seeks to invest where long-term fundamentals are not yet fully reflected in market prices, creating the opportunity for both earnings growth and valuation re-rating as companies mature and attract broader investor attention.

Role of Macroeconomic Considerations

Pembroke is a bottom-up investor. Macroeconomic factors such as interest rates, inflation, or economic cycles do not drive security selection or portfolio construction. These factors are monitored as part of overall risk awareness, particularly where they may influence company fundamentals or capital markets access, but they do not dictate investment decisions.

Portfolio Construction and Risk Management

The portfolio is constructed on a concentrated basis, with position sizes reflecting conviction, liquidity considerations, and company-specific risk. Risk management is embedded throughout the investment process and includes:

  • Conservative position sizing relative to liquidity
  • Ongoing monitoring of fundamentals and balance sheet strength
  • Continuous reassessment of investment theses as companies evolve

Given its focus on micro-cap and small-cap companies, the Genesis strategy is expected to experience higher volatility and lower liquidity than more diversified or larger-capitalization equity strategies. Pembroke classifies the Genesis Strategy as high risk, reflecting these characteristics.

Investors may access this strategy by investing in the Pembroke Genesis Pooled Fund, which is offered on a private placement basis to eligible accredited investors, subject to the terms outlined in the fund’s term sheet. Given the strategy’s focus on less liquid micro-cap and small-cap securities, the fund offers monthly liquidity and employs a fee structure that includes a performance-based component, as detailed in the fund’s term sheet.

Our Other Strategies

Balanced Strategies

U.S. Equity Strategies

Fixed Income Strategies

International and Global Equity Strategies

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